(Adds details, company executives' comments)
By Samantha Kareen Nair and Sankalp Phartiyal
BANGALORE/MUMBAI May 26 Tech Mahindra Ltd
, India's fifth-largest software service provider,
posted a lower-than-expected fourth-quarter consolidated profit
on Friday, weighed down by weak margins and higher cost of
Consolidated profit for the quarter ended March 31, fell 33
percent to 5.90 billion rupees ($91.53 million). bit.ly/2r4LvQC
Analysts on average had expected March-quarter consolidated
profit of 7.83 billion rupees, Thomson Reuters data showed.
Consolidated margin on earnings before interest, tax,
depreciation and amortisation (EBITDA) fell to 12 percent in the
quarter from 16.7 percent a year earlier.
EBITDA took a $20 million hit which came from the company's
exit of a networking business contract, Milind Kulkarni, chief
financial officer of the company said.
An appreciating rupee in the quarter and a $15 million
impact from "re-profiling" some of the company's legacy business
also contributed to the fall, Kulkarni added.
The company re-negotiated contracts with some of its clients
to provide traditional IT services at cheaper rates while
clients assured to spend more on automation and artificial
intelligence driven services.
The impact of this "re-profiling" on the company's finances
will be visible for the next two to three quarters, Kulkarni
Consolidated total tax expenses surged 28 pct to 2.32
billion rupees, while cost of services jumped 14.7 percent.
The company posted a near 10 percent jump in consolidated
total revenue, helped by growth in its European business.
"The deal pipeline is stronger in emerging markets and
digital transformation," C. P. Gurnani, chief executive of Tech
($1 = 64.4625 Indian rupees)
(Reporting by Samantha Kareen Nair in Bengaluru and Sankalp
Pharthiyal in Mumbai; Editing by Sherry Jacob-Phillips and Vyas